Peabody Skips Interest Payment

Peabody Energy Corp, the largest U.S. coal producer, said it may have to seek bankruptcy protection as it did not have enough funds to continue operations.

Falling demand for coal, tough environmental controls and cheaper natural gas have pushed several big coal miners, including industry No. 2 Arch Coal Inc, into bankruptcy in the past year.

Peabody, which flagged the bankruptcy risk under the "risk factors" section of a regulatory filing on Wednesday, said it decided to skip a $71.1 million interest payment on its senior notes, kicking off a 30-day grace period. (http://1.usa.gov/22jEJnJ)

The company, which had a total debt of $6.3 billion at the end of 2015, said there was "substantial doubt" about its ability to continue as a going concern.

Peabody's shares have crashed from their record high of more than $1,300 in 2008 to $4.01 as of Tuesday's close, reflecting the downturn in the coal market over the past few years.

The stock was down 30 percent at $2.80 before the opening bell on Wednesday.

Peabody's lenders are pushing it to restructure its debt through bankruptcy but the company has also been pursuing bond exchanges.

As of Dec. 31, the company had cash and cash equivalents of $261.3 million.

St. Louis-based Peabody's efforts to raise funds through asset sales hit a roadblock last month. A deal to raise $358 million in cash by selling coal mines in New Mexico and Colorado was temporarily shelved after the buyer failed to secure financing.

Fellow coal miner Foresight Energy LP said on Tuesday it may file for Chapter 11 bankruptcy if it does not reach an out-of-court restructuring agreement with its lenders.

Patriot Coal Corp, which was spun off from Peabody in 2007, filed for bankruptcy protection in May, just 18 months after emerging from its previous Chapter 11.

Other coal miners that have filed for protection include Walter Energy and Alpha Natural Resources Inc.

Reporting by Amrutha Gayathri